IAC targets Mukesh Ambani, accuses government of crony capitalism

New Delhi-India Against Corruption (IAC) turned its fire on Reliance Industries chairman Mukesh Ambani by alleging that S. Jaipal Reddy was axed as petroleum minister for refusing a RIL’s proposal to hike gas charges and accused the government of promoting “crony capitalism.”

IAC’s Arvind Kejriwal and Prashant Bhushan demanded that the Krishna-Godavari (KG) basin allotted to Reliance Industries be scrapped and accused the UPA government of favouring the RIL by giving contract on gas exploration in KG Basin and concessions at a huge cost to the exchequer.

“Their KG Basin contract should be cancelled. The government should immediately put in place adequate systems to get full production from KG Basin at the cheapest price for the country.”

Kejriwal and Bhushan slammed what they called a “classic case of crony capitalism”, and charged that Reliance was “blackmailing” the government to hike the price of gas by “almost stopping” the production and indulging in “hoarding like petty traders.”

“Mukesh Ambani is running the country it seems,” Kejriwal told the media here. “Jaipal Reddy was removed as he refused to hike the charges levied by Reliance Industries to supply gas to the NTPC (National Thermal Power Corp).”

According to Kejriwal, the KG basin was awarded to Reliance in 2000 by the NDA government when the company agreed to supply gas to the NTPC for the next 17 years at $2.34 per unit.

But, said Kejriwal, the company revised the rate to $4.25 per unit in 2007 which then finance minister Pranab Mukherjee agreed to as the head of an empowered group of ministers, benefiting Reliance to the tune of Rs.10,000 crore.

“The entire contract was meant to benefit Reliance because … the cost would be determined by the company, and if the cost increases, so will the profit,” he said, adding this was unheard of in business.

Kejriwal alleged that in 2006 then petroleum minister Mani Shankar Iyer was removed and Murli Deora brought in to increase Reliance Industries’ capital expenditure from $2.39 billion to $8.8 billion, and to hike gas price from $2.34 per unit to $4.25 per unit.

Later, the company wanted the rate further hiked to $14.2. Jaipal Reddy, who reportedly did not agree to the proposal, was shunted out in Sunday’s cabinet rejig, said the activist-politician.

Kejriwal released to the media a “secret” document of the petroleum ministry that said that accepting the Reliance demand would generate for it an additional profit of Rs.43,000 crore ($8.5 billion).

“In order to pressurize the government, RIL substantially reduced its production of natural gas,” a statement from India Against Corruption said.

“Production has been artificially kept low to blackmail the government. They are not just hoarding the gas but also forcing various consumers to buy gas from abroad.”

When Reliance sought Prime Minister Manmohan Singh’s intervention, he asked the attorney general to find out if the gas prices should be hiked or not.

“Why did the PM not show similar concern when NTPC was forced to accept a higher gas price from RIL? Why is the PM not pulling up Reliance for not producing gas as per their commitment? Why did the PM not seek legal opinion when the country’s interests were at stake?”

Kejriwal, who was flanked by fellow activists Prashant Bhushan and Manish Sisodia, demanded that Reliance Industries’ “blackmailing” should be immediately stopped.

The Bharatiya Janata Party (BJP) asked the prime minister to respond to IAC and explain why Jaipal Reddy was dropped from the petroleum ministry.

“Is it any malfunction in the ministry that has persuaded Manmohan Singh to effect this change? Or is that Jaipal Reddy was not found a convenient minister? Or is this another example of corporate interests taking precedence over national good,” BJP leader Jaswant Singh asked.

The activists cited purported conversations between corporate lobbyist Niira Radia and Atal Behari Vajpayee’s foster son-in-law Ranjan Bhattacharya to say that Ambani had boasted that the Congress was under his control. The conversation makes it clear that Ambani had powerful influence over the Congress and the BJP, he claimed.